Ridge, Inc., reports the following income for the current year.

Operations .................................................$92,000
Tax-exempt interest income .....................19,000
Long-term capital gain ................................60,000

Ridge holds earnings and profits (AAA for an S corporation) of $900,000 at the beginning of the year. A distribution of $200,000 is made to the owners.

a. Calculate the taxable income if Ridge is 

(1) A C corporation 

(2) An S corporation.

b. Determine the effect of the distribution on the shareholders if Ridge is 

(1) A C corporation  

(2) An S corporation.